The University of Wisconsin-Oshkosh Alumni Welcome and Conference Center has a 500 person ballroom, a 36-person executive board room and several 40-person breakout rooms as well as state-of-the-art technology throughout the building. Joe Sienkiewicz/USA TODAY NETWORK-Wisconsin

An electricity-
generating project powered by cow manure is one of the investments that is the subject of a lawsuit against two former officials of the University of Wisconsin-Oshkosh. A biodigester system at the Rosendale Dairy in Fond du Lac County was funded by the foundation. Joe Sienkiewicz / USA TODAY NETW, Joe Sienkiewicz / USA TODAY NETW

A biodigester at Rosendale Dairy - the state's largest dairy farm near Pickett - is one of the projects the University of Wisconsin-Oshkosh Foundation facilitated and gifted to the university. Submitted

Former UW-Oshkosh Chancellor Richard Wells and Tom Sonnleitner, former vice chancellor of administrative services, are accused of authorizing transfers and improperly funding capital projects between 2010 and 2016, including $806,000 for the Oshkosh Sports Complex, which includes Alumni Stadium and Titan Stadium, according to a civil complaint. Mark Hoffman / Milwaukee Journal Sentinel

Former UW-Oshkosh Chancellor Richard Wells and Tom Sonnleitner, former vice chancellor of administrative services, are accused of authorizing multiple transfers and improperly funding capital projects between 2010 and 2016, including $806,000 for the Oshkosh Sports Complex, which includes Alumni Stadium and Titan Stadium, according to a civil complaint. Mark Hoffman / Milwaukee Journal Sentinel

Tom Lechnir, longtime baseball coach at UW-Oshkosh, lost his job in 2013 after questioning why the university quietly diverted donations earmarked for a new baseball stadium to the $10.5 million Oshkosh Sports Complex. Danny Damiani / USA TODAY NETWORK-Wisconsin

OSHKOSH - The University of Wisconsin-Oshkosh Foundation filed its plan to reorganize under Chapter 11 bankruptcy proceedings, taking the most recent step to rebuild after over a year of scandal surrounding several major building projects.

The filing comes after a net $6.3 million settlement of outstanding debt first taken out by the foundation. The UW System will pay the banks' outstanding loans and UWO will pay about $3.8 million back to the System over the next 20 years.

A federal bankruptcy judge heard from the foundation during a status conference Tuesday but still needs to approve the plan. The reorganization plan is based on a settlement between the UWO Foundation and UW System.

Under the proposed plan, the UWO Foundation will transfer ownership of the Witzel biodigester and the Alumni Welcome and Conference Center to the UW System. The foundation will still house its office in the conference center rent-free beyond "reasonable contribution" to maintenance of the space. The university will also provide some support staff for the foundation.

According to the settlement, a second stipulation for the conference center rests on a $2 million donation from Craig Culver, a co-founder of the Culver's fast-food franchise and a member of the UWO Foundation's board of directors.

According to the initial settlement, the UWO Foundation and UW System agreed to give Culver permanent naming rights for the center.

Already having a settlement agreement with lenders made the foundation's proposed restructuring plan straightforward in that the plan largely follows the terms of the settlement, said Tim Mulloy, the foundation's board chairman.

The next step will come in the form of a new operating agreement with the university, Mulloy said.

"There's going to have to be more to come on that," he said. "We’re going to work behind the scenes with the Titan Alumni Foundation, and what our plan is here is to make this a model foundation in terms of governance and the relationship with the university."

Mulloy envisions the foundation having a more formal relationship with the university going forward. If building projects comes up in the future, he said, the foundation would limit its involvement to fundraising but likely would not take the effort on independently as it did with the past high-profile building projects, including two biodigesters, which turn organic waste into energy, and the Alumni Welcome and Conference Center.

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The University of Wisconsin-Oshkosh Alumni Welcome and Conference Center is located on the UW-Oshkosh campus next to the Fox River.(Photo11: Joe Sienkiewicz/ USA TODAY NETWORK-Wisconsin)

Central to the case bankruptcy debate was the question of who should pay the foundation's outstanding debt from those projects after then-Chancellor Richard Wells and then-Vice Chancellor Tom Sonnleitner signed several memorandums of understanding, also called "comfort letters," promising university backing for the foundation's lenders.

A civil case the UW System filed against Wells and Sonnleitner, alleging the two former administrators illegally funneled $11 million in public funds to the private foundation, remains on hold in Dane County Circuit Court. Meanwhile, a felony criminal case against the duo remains ongoing in Winnebago County, where they face charges of misconduct in office and acting outside the scope of their authority.

Other highlights from the foundation's plan include:

1. The UWO Foundation will work to merge with the Titan Alumni Foundation.

The Titan Alumni Foundation began in October to collect funds for student scholarships.

The launch of the second foundation sparked concerns from the leaders of the UWO Foundation, prompting a request from its lawyers to depose Chancellor Andrew Leavitt about the creation of the Titan Alumni Foundation and any promises made to donors.

While U.S. Bankruptcy Judge Susan Kelley granted a narrowed version of that request Dec. 11, Mulloy said the UWO Foundation will no longer pursue the deposition.

Kelley initially presided over a lawsuit UWO Foundation filed against the UW System, in which the foundation alleged the state should be responsible for the debts the foundation incurred while pursuing several major building projects.

Kelley's ruling in favor of the foundation in August led to an appeal process during which the state initiated a settlement mediation.

Scott Barr, an Appleton-based attorney and president of the Titan Alumni Foundation, declined a request from USA TODAY NETWORK-Wisconsin for comment on where merger talks stand, directing a reporter to the university.

"We look forward to having good faith discussions on the topic, but have nothing to report as of yet," Barr said in an email.

Mulloy said leaders from the two foundations will meet Monday to determine next steps. The UWO Foundation, or a merged foundation, would then establish a new memorandum of understanding with the university.

2. The UWO Foundation will pay over $500,000 in administrative costs created by the bankruptcy process from its own funds.

The foundation's plan outlines any outstanding administrative costs, which the says it can pay "from the cash flow generated by business activities" and other un-designated revenues. This includes:

About $300,000 in legal fees

$85,000 in fees and costs to the foundation's chief financial officer, Martin Cowie

$97,000 in accountants' fees

A $20,400 commission to First Weber Group Realtor Megan Lang, who sold the mansion the foundation bought from former Chancellor Richard Wells in 2013